Business Car Insurance

Business car insurance covers your car if you use it for work journeys, beyond just commuting to and from the same office or permanent workplace.

If you do these types of journeys in your car using standard car insurance you’ll actually be driving without proper cover and you risk invalidating your policy and your claim being rejected if you’re involved in an accident.

That’s because standard car insurance only covers you for social, domestic, and pleasure (SDP) use or SDP plus commuting to a single place of work.

Business car insurance will cover you for situations like:

Driving to meetings
Carrying business equipment
Visiting clients
Driving to work-related conferences
Going to a different office than your normal, permanent place of work

How does business car insurance work?

Business car insurance in the UK covers you and your vehicle when it's used for work-related purposes.

There are different classes of business car insurance, depending on how extensively you use your car for work.

Business car insurance: For drivers who use their car for part of their job, or travel to multiple locations for work, such as a salesperson
Commercial car insurance: For drivers who depend on their car to do their job, such as taxi drivers or driving instructors
Business van insurance: For van drivers who use their vehicle for work, such as builders or electricians

It is a legal requirement in the UK to have third party car insurance as a minimum, whether you're driving for business or driving for personal reasons.

If you're unsure whether or not you want to use your car for business purposes, then when getting car insurance quotes you can compare deals with and without business use selected.

You're an employee

If you are an employee using your personal car for business journeys (other than commuting to a single place of work), you will need to take out your own business car insurance.

You’re a company car driver

If you’re a company car driver you would normally be covered under fleet insurance and won’t need to take out your own business car insurance.

Some companies will also cover an employee’s personal car for occasional business use on their fleet policy but this isn’t common practice.

You’re a sole trader or freelancer

If you’re a sole trader or freelancer and you make work-related journeys you’ll need business car insurance, even if you’re using a personal car.

If you answer ‘yes’ to these questions and you’re not a company car driver then you need your own business car insurance:

✓ Do you visit clients?

✓ Do you carry work tools?

✓ Do you travel to multiple sites?

✓ Do you drive to the bank or Post Office for your business?

If you're not correctly insured, the police can issue:

£300 fine + 6 points

If the case goes to court you could get an unlimited fine, a driving ban and have your car seized and destroyed.

What’s covered
- Driving around clients or colleagues as part of your job
- Visiting clients
- Business trips to company off-site days, or training courses, conferences or exhibitions
- Making regular visits to other sites or offices
- Using your car for work admin like bank or Post Office visits
What’s not covered
- Making regular deliveries of goods, which is covered instead by business van insurance as you’re carrying goods belonging to others for payment
- Being a taxi driver - as you’re driving people around and receiving payment it’s classed as ‘driving for hire and reward’ so you’ll need specific insurance for that
- Being a driving instructor - this also requires a hire and reward insurance as you’ll receive payment from learner drivers. Specialist cover will take into account the increased risk of a learner driver having an accident and include a dual control courtesy car if yours is off the road

Business car insurance class 1

Covers your car if you use it to drive between multiple work locations, or to visit clients or customers, such as a hairdresser or financial adviser. It’s usually the cheapest class of business car insurance.
Business car insurance class 2

Grants the same cover as class 1 but allows you to add a named driver. If you work with another person and they use the car for work, they would also be covered.
Business car insurance class 3

Covers long-distance driving as part of your business use such as a door-to-door salesperson. Class 3 insurance is the most expensive type of business insurance.
Commercial car insurance

If you depend on your vehicle to do your job - for example, you’re a taxi driver, delivery driver or a driving instructor - then you should take out commercial car insurance.
This category is sometimes referred to as ‘carriage of goods for hire and reward’.

How much does business car insurance cost?

The amount you’ll pay in business car insurance will depend on a range of factors, including:

Who is driving the car: Whether there are one or multiple drivers, their age, and their claims and convictions history will all be considered
What the car is used for: The number of business and social miles you estimate the car will do each year, as well as what you’ll be using the car for in your business. If you regularly need to do long distance business journeys for work that is likely to increase your risk and make your premium more expensive, as will carrying valuable equipment
When and where the car is driven: Your location and the estimated time of day you drive can also influence your premiums. Driving during peak hours or between midnight and 6am when you’re naturally less alert could put you at greater risk of an accident and increase your premium
The type of car it is: The make and model of your car, and which insurance group it’s in, are important factors

Usage Type	Average annual premiums
Social and commuting to a single place of work/study (SDP&C)	£784.21^{^}
Social only (SD&P)	£702.74^{^}
Business use by the policyholder	£601.62^{^}
Business use by the policyholder and their spouse/civil partner	£483.98^{^}
Business use by the policyholder's spouse	£511.87^{^}
Business use by any driver	£732.10^{^}

Choose the right car

Pick a car in a lower insurance group, as they’re safer on the road and cheaper to cover. Check what group your car is in with our car checker tool
Keep it safe and secure

Take security measures such as fitting a Thatcham approved car alarm or storing vehicles in a locked garage to reduce the chances of theft or vandalism occurring
Keep your mileage low

Driving fewer miles means less time on the road, so the less likely you are to be involved in a road accident
Pay annually

Insurers usually charge less if you pay annually rather than in monthly instalments
Pay more excess

Pay a higher voluntary excess as this means you’re taking on more of the risk – but make sure you can still afford the excess
Build a no claims bonus

If you can go for a year or more without claiming on your policy, you’ll earn a no-claims discount on future premiums

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Our expert says…

If you drive your personal car for work - beyond commuting to the office - then you should take out business insurance. Employers will usually ask to see proof your car is insured for business use, or for you to declare that it is, before you make a work trip and they reimburse you for the cost of the journey. If your employer pays the approved mileage rates recommended by the Government, this takes into account the cost of insurance

Sarah Tooze Car & Van Insurance Expert

Do I need business car insurance if I have a company car?

No, if you have a company car, it will usually be insured for business use under the company’s fleet policy. Social, domestic, pleasure, and commuting is usually covered by fleet insurance too but it’s important to double check with your employer.

If you plan to drive a company vehicle outside the UK you might need separate cover.

You should also find out the process if you’re involved in an accident in your company car and whether your employer would expect you to pay the excess for an at-fault accident or a contribution towards it.

Who insures a company car?

It is the business that usually pays for company car insurance. If you are an employee using a business vehicle, it's typical for your employer to cover the cost of your insurance. Companies with lots of vehicles will usually take out fleet insurance, which will cover any employees using their business vehicles. However, employers aren't obligated to pay for your insurance when using a business car or van, so make sure you confirm this with your employer before you assume that you're already covered.
If you are self-employed or own your own business, you are responsible for arranging and paying for your business car insurance. Insurance for a business vehicle is considered a business expense, which means you can deduct the cost of your car insurance from your total payable tax.

Am I insured for personal use under a company car insurance policy?

It depends on the specific terms of the policy. Generally, company car insurance policies are designed to cover the vehicle for business use, and personal use may be limited or excluded altogether. Be sure to read the terms and conditions of your policy to see how you can use your car for personal use.

What's the difference between sole trader and company car insurance?

If you’re a sole trader, you won’t really have a company car – you and your business are essentially one and the same, so the car will belong to you. Depending on how you use your car for work, you may not even need business car insurance – a regular policy could be enough.

You’ll still be able to claim tax relief as a sole trader, which you can do either using the HMRC’s standard rate of 45p a mile for the first 10,000 miles and 25p thereafter, or you can work it out exactly.

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Can I claim for tax reimbursement in car insurance if I’m self-employed?

Yes, if you use your car for work. Car insurance is counted as a ‘running cost’ of your vehicle, along with petrol, parking fees, servicing and repair costs, so you can claim it as an allowable business expense. You can’t, however, claim the cost of buying a vehicle.

Can I add a named driver to my business car insurance?

Class 2 business car insurance allows you to add a named driver to your policy.

What extras are available for business car insurance?

When you take out business car insurance, be careful about the additional features you choose – they do bolster your cover, but you’ll generally need to pay more for the extra protection. Depending on your provider, you’ll usually have the choice of:

· Breakdown cover, which gives you access to roadside assistance if your car breaks down

· Windscreen cover, which lets you claim for the cost of replacing a cracked or shattered windscreen

· Legal cover, which will pay out for certain legal costs related to a claim by you or another party

· Driving abroad cover, which insures you for taking your car overseas and driving in the EU

· Courtesy car cover, which provides a replacement vehicle for you to use while yours is in repair

· Multi-car cover, which lets you drive more than one car under a single policy

· Personal accident cover, which pays out in the event that you’re injured or killed in a road accident

· Replacement keys, which covers the cost of replacing a set of keys if they’re lost, damaged or stolen

· Wrong fuel, which pays for repair costs if you accidentally top up the tank with the wrong fuel

Will my standard policy NCD be affected if I claim on business car insurance?

You would have to disclose the claim, but it wouldn’t affect your no claims discount. It could however affect your premium.

Can I get temporary business car insurance?

Some insurers may offer temporary or short term car insurance with business usage, but don’t assume this is guaranteed – always ask your insurer beforehand to ensure you have the right cover in place.

Do I need business car insurance to claim mileage?

You will need business car insurance if you're claiming mileage. This is because claiming back the cost of driving means you're driving for work purposes, and to legally be covered by car insurance you'll need a business policy.

Does business car insurance cover social use?

Your business car insurance policy should also offer cover for social, domestic and pleasure use as well as commuting.

Is it cheaper to add business use to my normal car insurance or buy a separate business policy?

Whether or not one option is cheaper than the other depends on how often you use your vehicle for business. If you are using your car on a regular basis for business – at least once a week – then it may be worthwhile to add business use to your normal car insurance policy. This will increase the cost of your monthly premiums, but your insurance will be easier to manage and may work out cheaper than purchasing a brand new business car insurance policy.

If you are only occasionally using your car for business, then you have the option of taking out a temporary car insurance policy. These policies give you short term cover for a day, a week, or a month, making them a cheaper option for work related use.

Is fleet insurance the same as business car insurance?

Fleet insurance and business car insurance are similarly used to insure business owned vehicles, but the two insurance products have very different purposes.

Fleet insurance is a type of vehicle insurance that will cover a large amount of vehicles under one policy - usually vans used for delivery. Providers can cover anywhere from two to hundreds of vans with just one policy.

Business car insurance, on the other hand, doesn't cover delivery of goods and typically is used to cover only a few vehicles per policy. Drivers also usually have to be named individually on business car insurance policies, whereas fleet insurance is normally bought with any driver van insurance which allows employers to provide insurers with a list of drivers to cover.

What is the difference between business and commercial car insurance?

Commercial car insurance is different from business car insurance.

Commercial car insurance covers people who use their car as an integral part of their job – such as taxi drivers, delivery drivers or driving instructors. 
A business car policy makes it legal for you to drive your car for work which is not included in a standard car insurance policy.

If you have a company car, it’s likely you won’t need business car insurance as it should be insured by the company. However, it’s a good idea to check with your employer to make sure you’re fully insured.

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Yes, you can earn SuperSaveClub rewards when you buy car insurance through MoneySuperMarket.

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Yes, car insurance is included in our Super Save Price Promise.

If you buy through us then find the same deal for less we will:

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